Labuan Company Formation Frequently asked questions (FAQs)

As of 2025, the Labuan company tax rate remains one of the most competitive in Asia. Here’s what you need to know:

• Trading companies: Under the LBATA, qualifying trading activities (e.g., import/export, consulting, management services) are taxed at 3% on audited net profits. Note: licensing of intellectual property (royalties) is taxed under Malaysia’s Income Tax Act 1967, not LBATA.
• Non-trading companies: Entities engaged in passive income activities such as holding investments, receiving dividends, or owning property can enjoy 0% corporate tax.
• Substance requirements: To access these rates, Labuan companies must meet OECD-aligned conditions:
  • Maintain a physical office in Labuan.
  • Employ a minimum number of full-time employees in Labuan (nationality not prescribed) and incur prescribed annual operating expenditure in Labuan.
  • Incur adequate annual operating expenditure in Labuan.
  • Other trading services generally require at least 2 full-time employees in Labuan and RM50,000 annual OPEX; Pure Equity Holding requires no FTE, RM20,000 annual OPEX, and clear control & management in Labuan (e.g., board meeting in Labuan, resident secretary, records kept in Labuan).
• Alternative taxation option: A Labuan company may irrevocably elect to be taxed under Malaysia’s Income Tax Act 1967 (e.g., for market or treaty reasons).
• Additional tax advantages:
  • Withholding tax: Not applicable on interest, royalties and section 4A service fees paid by a Labuan company to non-residents, and dividends from a Labuan company are exempt in the recipient’s hands, under the Income Tax (Exemption) Order 2025 (effective from YA 2023, currently through YA 2027).
  • Capital gains: No CGT applies to income taxed under LBATA; however, Malaysia’s CGT on disposals of unlisted shares (from 1 Jan 2024) may apply if the entity is taxed under the ITA or the disposal falls within the ITA scope.
  • Access to Malaysia’s double taxation agreements (DTAs) in certain cases.

Why work with Offshore Company Services?

To get your taxes right in Labuan, you need to follow the rules and show you're really doing business there. Offshore Company Services can help you with everything, from signing up your company to keeping up with taxes and accounting. We make sure your business follows all the rules and gets the most out of the 3% or 0% tax breaks.

 

A business license in Malaysia is an official approval or permit issued by government authorities, allowing individuals or companies to legally operate within the country. It provides proof that the company operates within local jurisdictions guidelines, safety laws per regulations and zoning resolutions.

Depending on the nature of the business, industry, and location, different types of licenses may be required. They essentially refer to one of these categories in three ways:

1. General Licenses (applicable to all businesses):
   • Company Registration with the Companies Commission of Malaysia (SSM) is a mandatory prerequisite for most businesses before obtaining other licenses.
   • Income Tax Registration with the Inland Revenue Board (LHDN).
   • Employees Provident Fund (EPF) and SOCSO registration if hiring employees.
   • Business Premises License and Signboard License, usually issued by local municipal councils.
2. Sector-Specific Licenses:
   • Sector-specific licenses are required for industries such as finance (regulated by Bank Negara Malaysia), healthcare and F&B (regulated by the Ministry of Health), and telecommunications (regulated by MCMC).
   • For online businesses or e-commerce platforms, registration with the Malaysia Communications and Multimedia Commission (MCMC) and compliance with the Consumer Protection regulations may be required.
3. Special Permits or Approvals:
   • For businesses involved in import/export, manufacturing, or foreign labor employment.
   • May require clearances from agencies like MITI, Customs Department, or Immigration Department.

=> More Information: Company Formation in Labuan, Malaysia

What is a business license in Malaysia? In Malaysia, a business license is a legal permit from the government that authorizes a person or company to carry out business within this particular country. This is a law for both local and foreign businesses in order to guarantee that local operation complies with Malaysia's laws, Safety Norms and Regulations.

A business license in Malaysia may refer to one or more permits depending on the business nature and location, including:

• A premise license
• Signboard license
• Sector-specific approvals

Securing a business licence is very important not only for legal grounds but also because it would build the credibility of the customers, suppliers and financial institutions. Operating without the appropriate licenses can result in fines, legal action, or forced business closure. 

=> More Information: Company Formation in Labuan, Malaysia

Companies incorporate in Labuan for its strategic location, tax efficiency, and flexible business environment. As a midshore financial center under Labuan IBFC, it offers key advantages for trading, holding, and financial services.

• Low tax rates: 3% on trading profits or 0% for non-trading/holding companies
• Full foreign ownership and free repatriation of profits
• Access to select double tax treaties via Malaysia, but applicability depends on the partner country and nature of the income.
• Fast incorporation (5–7 days) with low capital requirements
• Confidentiality: Beneficial owner information is filed with the Labuan FSA but is not available to the public, ensuring confidentiality while maintaining regulatory oversight.
• Ideal for: International trade, investment holding, fintech, fund management

Labuan companies may access certain Malaysian double tax treaties, but applicability depends on the partner country and nature of the income. Investors should check whether Labuan entities are covered under relevant DTAs.

This makes Labuan especially attractive for international trading companies, holding structures, investment funds, wealth management, and fintech ventures looking to operate across Asia with tax efficiency and legal clarity.

If you want to search or verify a company that is registered in Labuan, follow the below steps to check if the company is licensed or recognised under the jurisdiction:

Step 1: Visit the Labuan FSA official website

Visit www.labuanfsa.gov.my – this is the official site of the Labuan Financial Services Authority, which regulates all licensed entities within the Labuan International Business and Financial Centre.

Step 2: Visit the "Licensee List"

On the home page, look for the "Licensee List" link (usually in the "List & Schedule" or "Licensees" menu). The website provides downloadable PDFs or search lists of licensed institutions.

Step 3: Search by category or name

If you know the business type or firm name (e.g., trust company, insurance company, fund manager), scroll down the corresponding list to locate the firm information. Each entry lists the business type, license number, and firm name.

Step 4: Interpret the list of entities mentioned

Observe that the listing would include only licensed and registered companies (i.e., insurers, fund managers, trust companies, banks). Private Labuan companies that do not require licensing (i.e., normal trading or holding businesses) are not listed.

Step 5: Ask for verification by a Labuan trust company

If the company cannot be located in the Licensee List but you need to verify its incorporation anyway, you will have to reach out to a Labuan-licensed trust company or corporate service provider. These companies have an in-house registration database and can determine the legality status of the company, normally on formal application and due diligence.

Step 6: Take care of confidentiality requirements

Labuan's privacy regime is strong. What this means is that, unlike Malaysia's local company register (SSM), Labuan does not offer open-access databases on all business entities. Company searches typically require professional assistance or regulatory support.

For investors or businesses looking to register or verify a Labuan entity efficiently, professional service providers such as Offshore Company Services can assist with company searches, licensing checks, and compliance, ensuring full due diligence in line with Labuan regulations.

=> Full Information: Everything You Need to Know About Labuan Company Search

Yes, the country has signed double tax agreements with 65 countries.

From US$ 1 onward

Both Malaysian or Non Malaysian can be the director & beneficiary of a labuan company.

Only for licensed companies and companies electing to pay 3% tax.

Nevertheless, there is still a requirement to keep accounts that will sufficiently show the financial position of the company. With increased compliance, it is common that most companies will be required to prepare at least management accounts

Read more:

• Labuan offshore company
• Labuan, Malaysia Merchant Account

Yes but it is simple.

Yes and if more than one is appointed at least one must be a resident secretary.

Only an approved officer of a Labuan trust co or its wholly owned subsidiary may be appointed as a resident secretary.

Read more:

• Labuan company formation

Not necessary.

In most cases, registering a Labuan company is a swift and straightforward process, thanks to the jurisdiction’s business-friendly regulations and streamlined corporate framework. Upon lodgement of complete documents and fees, and after due diligence clearance, Labuan FSA can approve incorporation within 24 hours. In practice, the overall setup (including LTC KYC and name reservation) is commonly 3–7 working days, while bank account opening may add ~2–4 weeks depending on the bank.

Here’s a general breakdown of the process:

1. Preparation and documentation – Conducted through a licensed Labuan Trust Company (LTC), which performs KYC/AML and drafts the incorporation papers. This stage typically takes 1–3 working days, depending on client readiness.
2. Name reservation and application submission – Name approval is typically granted within 24 hours and reserved for three months; your LTC then files the incorporation via Labuan FSA’s COR@L online registry.
3. Approval and certificate issuance – Upon review and acceptance by the Labuan FSA, the Certificate of Incorporation is issued. Approval and certificate issuance can be completed within 24 hours once complete documents, fees, and due diligence clearance are in place.
4. Post-registration compliance – Opening a corporate bank account typically takes ~2–4 weeks, depending on the bank and due diligence. If your entity is required to file audited financial statements, appoint a Labuan-approved auditor and lodge the AFS via COR@L. To enjoy LBATA’s preferential tax rates (3% for trading / 0% for non-trading), meet the economic substance requirements; entities that do not qualify may be taxed at 24% under the domestic regime.

While Labuan company formation is relatively quick, working with an experienced provider like Offshore Company Services can help you avoid unnecessary delays. We handle name checks, document preparation, and liaising with the Labuan FSA, ensuring your company is registered smoothly and on schedule.

=> Full Information: Expert Insights on Labuan Company Registration

No. One IBC will assist you in incorporating the Labuan Company from start to end.

One director who can either be an individual or a corporate entity and one shareholder who can either be an individual or a corporate entity.

Yes, One IBC can assist you.

Yes. Under the Labuan Companies Act 1990, all Labuan companies, whether engaged in trading or non-trading activities, are required to file an annual return with the Labuan Financial Services Authority (Labuan FSA). This filing obligation applies even if the company did not actively trade during the year.

The annual return serves as an official update of key corporate information, including the company’s registered details, shareholding structure, directors, secretary, and compliance status. It is separate from the annual tax filing required under the Labuan Business Activity Tax Act 1990 (LBATA) for companies engaged in Labuan business activities.

Key points to note:

• Deadline – The annual return must be lodged not later than 30 days before the anniversary of the company’s incorporation. If the annual return is filed late, the company commits an offence under the LCA and may face monetary penalties. Note: strike-off is generally triggered by non-payment of annual fees under section 151, not merely by a late annual return.
• Applies to all Labuan companies (both trading and non-trading) – Other entities like Labuan trusts and foundations follow their own annual filing rules with Labuan FSA.
• Filing content – The annual return follows the prescribed form and typically includes the registered office address, where the register of members is kept, particulars of charges/indebtedness, details of directors and secretaries, the auditor’s name and address, and other matters relating to the company’s accounts.
• Additional compliance – For trading entities, LBATA taxes 3% of audited net profits (subject to substance requirements); the former RM20,000 election was removed from 1 January 2019. Non-trading entities are generally taxed at 0% under LBATA. Under the LCA, appointing an auditor isn’t universally mandatory, but companies must keep proper accounting records, and trading entities will, in practice, need audited financial statements to support their LBATA filing.

Note: Late filing may attract monetary penalties. Strike-off generally occurs for non-payment of annual fees under section 151, after statutory notices and grace periods.

At Offshore Company Services, we help clients manage all Labuan annual compliance requirements, from preparing and filing annual returns to handling tax submissions, ensuring no deadlines are missed. With our support, your Labuan entity stays in good standing year after year, allowing you to focus on business growth while we handle the regulatory details.

=> Full Information: Expert Insights on Labuan Company Registration

Yes for Trading Company. Not required for Holding Company.

Malaysia is the third-largest country in Southeast Asia and the 35th in the world. The government of Malaysia has built a friendly business environment and provided a variety of incentive policies for foreign investors and businesses to open an offshore company in Labuan.

Labuan is a Federal Territory of Malaysia and a strategic place to invest in Asia. In recent years, Labuan has become a popular jurisdiction to attract many investors and businesses around the world. Investors and businesses will enjoy a lot of benefits such as low taxes, 100% foreign-owned, cost-effective, and confidentiality secured, etc. to do business in Labuan, Malaysia.

Labuan is not only a famous place to travel but also an ideal place to open an offshore company. In order to do business in Labuan, you need to follow these steps:

Step 1: Choose your business nature and structure that fits your business plan;

Step 2: Decide and propose 3 valid names for your company; 

Step 3: Decide on Paid-Up Capital;

Step 4: Open a corporate bank account for your offshore company;

Step 5: Consider if you need two years’ multiple entry work visas for yourself, partners, and family members.

Together with Singapore, Hong Kong, Vietnam, etc. Labuan has become the new destination in Asia, where global investors and businessmen come to expand their business. 

Labuan is a Federal Territory of Malaysia which was originally established on 1 October 1990 as Labuan Offshore Financial Centre. Later on, it was renamed to Labuan International Business and Financial Centre (Labuan IBFC) in January 2008.

Like some other offshore financial centers, Labuan IBFC offers a wide range of financial services and products to customers including banking, insurance, trust business, fund management, investment holding and other offshore activities.

Incorporation of a Labuan company in Labuan International Business and Financial Centre (Labuan IBFC) must be done through a registered agent. The application should be submitted together with the Memorandum and Articles of Association, consent letter to act as director, statutory declaration of compliance as well as payment of registration fees based on paid-up capital.

The Labuan Financial Services Authority (Labuan FSA), formerly known as Labuan Offshore Financial Services Authority (LOFSA), is a one-stop agency which was established on 15 February 1996 as a single regulatory body to promote and develop Labuan as an International Business & Financial Centre (IBFC). Its establishment further draws the attention of the government’s commitment to make Labuan a premier IBFC of high repute.

Labuan FSA is formed to focus on business development and promotion, process application and supervise business and financial activities, develop national objectives, policies and set priorities, administer and enforce legislation, and incorporate/register Labuan offshore companies.

Labuan Financial Services Authority (Labuan FSA) helps in managing and regulating the international business and financial centre and undertakes economy research and development. Labuan FSA also comes out with plans for further growth and greater efficiency of the Labuan IBFC.

Furthermore, since Labuan’s establishment in 1996, it has reviewed the current legislations for the purpose of making the required and proper changes as well as to plan new activities to enlarge and deepen the financial services industry.

Labuan FSA is also taking measures to draw more interest to a bigger number of professionals and skilled workers to live and work in Labuan IBFC to support the industry.

Besides that, Labuan FSA has come out with policies that help to facilitate and assist the creation of a competitive and attractive business environment in Labuan. Furthermore, Labuan’s legislative framework is not only business-friendly but at the same time it helps to protect Labuan’s international image as a clean and reputable international business and financial centre.

The amount of capital required to start a business in Malaysia can vary widely depending on the type of business, its size, location, and industry. Malaysia offers a range of business opportunities, from small startups to larger enterprises, so the capital required can be flexible.

Here are some key factors that can influence the capital needed to start a business in Malaysia:

1. Business Type: The capital required will vary significantly depending on whether you're starting a small retail shop, a tech startup, a manufacturing company, or a service-based business.
2. Location: The cost of doing business in Malaysia can vary by location. Setting up a business in a major city like Kuala Lumpur may require more capital than in a smaller town or rural area.
3. Legal Structure: The type of business structure you choose (e.g., sole proprietorship, partnership, limited liability company) will impact the initial capital requirements.
4. Industry and Regulations: Different industries may have specific licensing or regulatory requirements that can affect your startup costs.
5. Scale and Scope: The scale of your business, the number of employees you plan to hire, and the scope of your operations will also influence your capital needs.
6. Business Plan: A well-thought-out business plan can help you determine the specific capital requirements for your venture.

To get a more accurate estimate of the capital needed for your specific business idea, it's advisable to consult with a financial advisor or a business consultant who can help you assess your unique circumstances and develop a detailed financial plan. Additionally, you may want to reach out to government agencies or business support organizations in Malaysia, such as the Malaysia Digital Economy Corporation (MDEC) or the Companies Commission of Malaysia (SSM), for guidance and information on starting a business in the country.

You can renew your business license in Malaysia online in some cases, depending on the type of business and the local regulations. However, the specific process and requirements may vary depending on the location and nature of your business. To renew your business license online, you typically need to follow these general steps:

1. Check Eligibility: Determine if your business qualifies for online license renewal. Some businesses may still require in-person renewals, while others may have an online option.
2. Visit the Appropriate Website: Visit the website of the relevant government authority or agency that handles business licenses. This is typically the Companies Commission of Malaysia (SSM) or the local city or municipal council.
3. Create an Account: If you haven't already, you may need to create an online account on the relevant government website.
4. Log In: Log in to your account using your username and password.
5. Locate the License Renewal Section: Look for the section related to business license renewal. This might be under "e-Services" or a similar category.
6. Provide Required Information: Follow the instructions on the website to provide the necessary information, which may include your business registration number, personal details, and payment details.
7. Pay the Renewal Fee: Pay the renewal fee online using the provided payment options, which typically include credit/debit cards or online banking.
8. Review and Submit: Double-check the information you've provided and submit your renewal application.
9. Receive Confirmation: Once your renewal is processed, you should receive a confirmation or a renewed license via email or by post.

Please note that the process might have changed or evolved, so it's essential to visit the official government website or contact the relevant authority to get the most up-to-date and accurate information on how to renew your business license online in Malaysia. Regulations and processes can change over time, and it's crucial to follow the latest guidelines provided by the authorities.

The fees for business license renewal in Malaysia can vary depending on the type of business, location, and other factors. The specific fees may change over time due to updates in government regulations. To find out the exact fee for renewing a business license in Malaysia, you should contact the local government authority or the relevant agency in your area.

Typically, you can inquire about business license renewal fees from the following sources:

1. Local Municipal or City Council: In Malaysia, local government authorities such as municipal or city councils often handle business licenses. You can visit their official websites or contact their offices to get information on the renewal fees.
2. Companies Commission of Malaysia (SSM): The SSM may be involved in the licensing and registration of certain businesses. You can visit their website or contact their offices for information on fees related to your specific business type.
3. Local Business Associations: Local business associations or chambers of commerce may also provide information on business license renewal fees and procedures.

It's essential to ensure that you have the most up-to-date and accurate information regarding fees, as they can change over time, and the fees may vary based on your business type and location.

The process for incorporating a company in Malaysia can vary in duration depending on several factors, including the type of company, the completeness of your documentation, and the efficiency of the government agencies involved. On average, it can take anywhere from 1 to 2 months to complete the incorporation process. Here is a general timeline and overview of the steps involved:

1. Name Search and Reservation: This is the first step and typically takes 1-2 business days. You need to choose a unique name for your company and submit it for approval.
2. Preparation of Documents: Once your company name is approved, you'll need to prepare the necessary incorporation documents, including the Memorandum and Articles of Association (M&A), statutory declarations, and other required forms. The time required for this step depends on how quickly you can gather and prepare the documents.
3. Submission of Documents: After your documents are ready, you can submit them to the Companies Commission of Malaysia (SSM) or via the MyCoID online system. The processing time for document submission can vary, but it usually takes a few weeks.
4. Approval and Registration: Once the documents are submitted and reviewed, you will receive the certificate of incorporation if everything is in order. This step can take several weeks, depending on the workload at the SSM.
5. Post-Incorporation Procedures: After receiving your certificate of incorporation, you'll need to complete additional post-incorporation procedures, such as applying for business licenses, registering for taxes, and opening a company bank account. The time required for these procedures can vary based on the specific requirements.

It's important to note that there are various business structures in Malaysia, such as sole proprietorships, partnerships, and different types of companies (e.g., private limited, public limited, etc.), and the incorporation process may vary slightly for each. Additionally, any changes in government regulations or backlogs at government agencies can impact the timeline.

To ensure a smooth and efficient incorporation process, it's recommended to work with a professional service provider or consultant who is knowledgeable about the process and can assist with the necessary paperwork and compliance requirements. They can help expedite the process and ensure that you meet all legal requirements.

To check your company registration number in Malaysia, you can follow these steps:

1. Visit the SSM (Companies Commission of Malaysia) Website: Go to the official website of the SSM, which is the regulatory body responsible for company registrations in Malaysia. The website is www.ssm.com.my.
2. Access e-Services: Look for the "e-Services" or "Online Services" section on the website. This is where you can access various online services, including checking your company registration number.
3. Register for an Account (If Needed): If you don't have an account on the SSM e-Services portal, you may need to register for one. Follow the registration process, which typically involves providing your personal and business information.
4. Log In to Your Account: Log in to your account using the credentials you've just created.
5. Access Company Information: After logging in, look for the option to access company information or perform a company search. This can usually be found in the e-Services menu.
6. Search for Your Company: Enter the relevant details about your company, such as the company name, registration number, or other identifying information. You should be able to find your company's registration details.
7. View Registration Information: Once you locate your company, you can view and verify the registration information, including your company registration number (also known as the company registration or business registration number).

Please note that the exact steps and details may change, so it's a good idea to refer to the SSM website for the most current and accurate information on checking your company registration number in Malaysia. Additionally, you may need to pay a small fee for accessing this information through the online service. If you encounter any difficulties, you can also consider contacting the SSM directly for assistance.

No, you do not need to be physically present in Malaysia to set up a Malaysian company. Malaysia allows foreign individuals and entities to establish businesses in the country, and the process can be initiated from abroad. Here are the general steps to set up a Malaysian company as a foreigner:

1. Choose the Business Structure: Decide on the type of company structure you want to establish, such as a private limited company (Sendirian Berhad or Sdn Bhd).
2. Reserve a Company Name: Check and reserve a unique company name through the Companies Commission of Malaysia (SSM) online portal.
3. Appoint Directors and Shareholders: Identify the directors and shareholders for your company. At least one director must be a resident of Malaysia.
4. Register the Company: You can engage a company secretary in Malaysia to help you with the registration process. They will assist in preparing the necessary documents and filing them with SSM.
5. Minimum Paid-Up Capital: Ensure that the company meets the minimum paid-up capital requirements, which can vary depending on the business activities.
6. Registered Office: You will need to provide a registered office address in Malaysia.
7. Apply for Necessary Licenses: Depending on your business type, you may need specific licenses or permits. Check with relevant authorities to ensure compliance.
8. Bank Account: Open a company bank account in Malaysia to handle financial transactions.
9. Taxation: Register your company for taxation with the Inland Revenue Board of Malaysia (LHDN).
10. Compliance: Comply with annual filing and reporting requirements, such as the submission of annual returns and financial statements.

While you can start the process from abroad, you may need to visit Malaysia for certain steps, like opening a bank account, meeting with local authorities, or signing certain legal documents. Additionally, having a resident director is a requirement for most company structures, but there are services available that can provide a nominee director if needed.

It's highly advisable to seek legal and professional assistance, such as engaging a company secretary or a business consultant in Malaysia, to ensure that you follow all the necessary procedures and meet the legal requirements. Laws and regulations may change, so it's essential to stay up to date with the latest information when starting a business in Malaysia.